Some retailers are in denial about it. Or they’re reluctant to acknowledge it. But rest assured: consumer demand for price adjustments (partial refunds for items purchased at full price just prior to sales) isn’t going away.
There are two main reasons for this.
First, customers have been conditioned to expect discounts. Back when sales were seasonal events, customers would either buy items as needed or hold off until they knew prices would drop. Now, retailers routinely use flash sales to differentiate themselves and drive foot traffic to their stores all year long.
Second, price is still a major consideration for consumers. Faced with an overwhelming array of product options, and empowered by their mobile devices, consumers have taken bargain hunting to a whole new level.
If you’re in the denial camp, or you prefer a reactive approach (addressing price adjustments only when customers ask), it’s time to embrace the practice and introduce a policy that will benefit your brand in the long run.
What Our Brand Study Revealed
Recently, a retail client came to us and asked how other leading brands are handling price adjustments. (This company doesn’t offer price adjustments, even when customers call with requests.) For answers, we audited the 30 companies in our StellaService Ecommerce Index.
Of the 30 brands in the Index, 63 percent had an explicit price adjustment policy posted on their website. Time frames for issuing price adjustments varied:
- Within 7 days of purchase (7 percent)
- Within 10 days (10 percent)
- Within 14 days (27 percent)
- Within 30 days (3 percent)
- Within the return window (7 percent)
In the case of brands without an explicitly stated policy (37 percent), customers had to contact customer service to ask about the policy and, if they qualified, request a refund of the price difference.
How to Make Price Adjustments a Win-Win for You and Your Customers
If you have a price adjustment policy in place, your customers may be less likely to purchase items at full price. But the upside is far greater: they’ll know they can shop with confidence on any given day. So they’ll be more inclined to spend with you throughout the year.
There’s another upside as well. If you’re transparent about your policy, you’ll save the cost of every phone and chat inquiry you’d otherwise invite. Customers won’t have to ask where you stand, and they’ll know right away whether their purchase falls within the specified time frame.
It’s important to consider the nature of your policy and how you communicate it—not to mention how it will impact financial planning, analytics, and every other facet of the business. Here are a few best practices to keep in mind.
Be Clear and Specific (but Flexible, Too)
In the early days of ecommerce, customers had to ask about return policies. Today, return policies are laid out in black and white on almost every retail website.
Price adjustment policy is heading in the same direction, for the same reasons: 1) customers shouldn’t have to ask simple questions; and 2) retailers shouldn’t have to spend time answering them.
Of course, you may still hear from high-value customers who just missed a price adjustment window due to extenuating circumstances. If those customers are worth keeping, consider honoring their requests.
Note Exceptions in your Policy
Your policy should make it easy for customers to understand where they stand, but it should also give you flexibility around special promotions that you may run at key times of the year. You may choose to exclude doorbuster deals on Black Friday for example. Being clear in your policy will avoid any confusion on the part of your customers.
Refund the Difference on Your Customers’ Terms
Think about how you’ll manage price adjustments: via coupons / store credits, or by applying refunds directly onto credit cards. The former is certainly an attractive option. In effect, the price adjustment becomes a past payment on a future purchase. The revenue stays within the business, and customers remain loyal. Technically, perhaps, but that’s not what most customers want. They’d rather see the price difference refunded to the credit card they used to make the purchase.
Doing things on your customers’ terms means they’re free to go elsewhere. At the same time, they’ll know your brand is centered around them. Unlike a single return visit to redeem a store coupon, the loyalty you’ll earn by putting customers first will prove far more valuable over time.